B-151829, SEP. 11, 1963

B-151829, SEP. 11, 1963

TO INTERNATIONAL FERMONT, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM DATED JUNE 19, 1963, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE REJECTION OF YOUR BID AND THE MAKING OF A CONTRACT AWARD ON JUNE 19, 1963, TO THE CLARK EQUIPMENT COMPANY,CONSTRUCTION AND MACHINERY DIVISION, BENTON HARBOR, MICHIGAN, UNDER INVITATION FOR BIDS NO. AMC/T/-11-184-63-474/A), ISSUED ON APRIL 29, 1963, BY THE U.S. ARMY ENGINEER PROCUREMENT OFFICE, CHICAGO.

BIDS WERE REQUESTED AT F.O.B. ORIGIN PRICES FOR THE MANUFACTURE OF A MAXIMUM QUANTITY OF 672 TRACTORS, WHEELED, INDUSTRIAL, DIESEL ENGINE DRIVEN DRAWBAR PULL, 4 WHEEL DRIVE, HINGED FRAME STEERABLE, PNEUMATIC TIRED, POWER SHIFT TRANSMISSION, WITH BULLDOZER, HYDRAULIC, TILTING WITH BACK RIP SCARIFIER, HYDRAULIC SCRAPER CONTROLS, CONFORMING TO MILITARY SPECIFICATION MIL-T-52272/MO) DATED FEBRUARY 19, 1963, WITH ADDENDUM A DATED APRIL 4, 1963, AND MODIFICATIONS THERETO AS PROVIDED FOR IN THE INVITATION FOR BIDS.

THE TRACTORS PROPOSED TO BE PURCHASED WERE HEAVY, WHEELED, EARTH MOVING UNITS WEIGHING APPROXIMATELY 50,000 POUNDS, DESIGNED FOR COMBAT USE AND TRANSPORTATION BY AIRCRAFT. THE PROPOSED WEIGHT OF THE TRACTOR IS LESS THAN ONE WHICH NORMALLY WOULD BE PROVIDED COMMERCIALLY AND A CONSIDERABLE AMOUNT OF EXPERIMENTATION WAS REQUIRED TO INSURE THAT THE WEIGHT OF THE TRACTOR WOULD NOT BE IN EXCESS OF THAT WHICH COULD BE EFFICIENTLY HANDLED BY AIRCRAFT TRANSPORT. THE APPLICABLE SPECIFICATIONS WERE DEVELOPED BY THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES, FORT BELVOIR, VIRGINIA, WITH THE ASSISTANCE OF THE TRACTOR MANUFACTURING INDUSTRY, AND EXPERIENCE OBTAINED THROUGH THE PRODUCTION OF A PROTOTYPE UNDER A CONTRACT WITH THE CATERPILLAR TRACTOR COMPANY, PEORIA, ILLINOIS.

FOUR BIDS WERE RECEIVED AND THEY WERE OPENED AS SCHEDULED ON MAY 29, 1963. THE LOW BID WAS SUBMITTED BY YOUR COMPANY QUOTING A PRICE OF $29,718 EACH FOR 671 TRACTORS AND A PRICE OF $150,000 FOR THE PREPRODUCTION MODEL REFERRED TO AS ITEM NO. 1A OF THE INVITATION FOR BIDS. THE SECOND LOWEST BID WAS SUBMITTED BY THE CLARK EQUIPMENT COMPANY QUOTING A PRICE OF $30,810 EACH FOR ALL 672 UNITS INCLUDING THE PREPRODUCTION MODEL. THE REMAINING BIDS WERE SUBMITTED BY THE FRANK J. HOUGH COMPANY, LIBERTYVILLE, ILLINOIS, AND THE CATERPILLAR TRACTOR COMPANY, QUOTING THE RESPECTIVE PRICES OF $31,790 AND $36,765 EACH FOR 671 UNITS; AND SLIGHTLY HIGHER PRICES FOR THE PREPRODUCTION MODEL. WITHOUT CONSIDERATION OF PRICES QUOTED FOR INCIDENTAL SERVICES AND RELATED SPECIFICATION MATERIAL, WHICH DID NOT AFFECT THE RELATIVE STANDING OF THE FOUR BIDDERS, THE BID OF YOUR COMPANY WAS IN THE TOTAL AMOUNT OF $20,090,788 AS COMPARED WITH THE BASIC TOTAL PRICE OF $20,704,320 QUOTED BY THE CLARK EQUIPMENT COMPANY FOR THE 672 UNITS.

THE CONTRACTING OFFICER REQUESTED THAT PREAWARD SURVEYS BE CONDUCTED IN ORDER TO ASSIST HIM IN DETERMINING THE QUALIFICATIONS OR RESPONSIBILITY OF THE TWO LOWEST BIDDERS TO PERFORM THE SPECIFIC CONTRACT BOTH IN REGARD TO THEIR CAPABILITY TO COMPLY STRICTLY WITH THE ADVERTISED SPECIFICATIONS AND TO MEET THE PROPOSED DELIVERY SCHEDULES. IN YOUR CASE THE SERVICES OF THE NEW YORK AND CHICAGO DISTRICT ENGINEER OFFICES, AS WELL AS THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES WERE UTILIZED FOR PERFORMANCE OF A PREAWARD SURVEY. THE SURVEY TEAM CONSISTED OF TWO REPRESENTATIVES EACH FROM THE CHICAGO AND NEW YORK DISTRICT ENGINEER OFFICES AND A REPRESENTATIVE FROM THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES. REPRESENTATIVE OF HEADQUARTERS, U.S. ARMY MOBILITY COMMAND, ACCOMPANIED THE SURVEY TEAM AS AN OBSERVER. IN THE CASE OF THE CLARK EQUIPMENT COMPANY, THE PREAWARD SURVEY WAS CONDUCTED BY TWO REPRESENTATIVES OF THE DETROIT DISTRICT ENGINEER OFFICE.

ON JUNE 12, 1963, AFTER RECEIPT OF THE PREAWARD SURVEY REPORTS, THE CONTRACTING OFFICER DETERMINED THAT YOUR COMPANY COULD NOT BE CONSIDERED A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE MANUFACTURE OF THE REQUIRED QUANTITY OF TRACTORS AND THAT THE CONTRACT AWARD SHOULD BE MADE TO THE CLARK EQUIPMENT COMPANY AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER. HIS RECOMMENDATIONS FOR REJECTION OF YOUR BID AND ACCEPTANCE OF THE SECOND LOWEST BID WERE APPROVED BY HIGHER AUTHORITY AND THE AWARD WAS THEN MADE TO THE CLARK EQUIPMENT COMPANY.

IT WAS DETERMINED BY THE MEMBERS OF THE SURVEY TEAM WHICH VISITED YOUR PLANT ON JUNE 4, 1963, THAT YOUR COMPANY DID NOT POSSESS ADEQUATE FACILITIES INCLUDING MANUFACTURING, DESIGN AND STORAGE SPACE, SHOP EQUIPMENT OR MATERIAL HANDLING EQUIPMENT; THAT YOUR COMPANY IS NOT A TRACTOR MANUFACTURER BUT AN ASSEMBLER OF COMPONENTS WITH PRODUCTION CAPABILITIES LIMITED TO SHEET METAL WORK, WELDING, ELECTRICAL INSTALLATION WORK AND PAINTING; THAT YOUR COMPANY HAS HAD SOME LIMITED EXPERIENCE IN PRODUCING SELF-PROPELLED UNITS WITH CHASSIS FURNISHED BY OTHERS; BUT THAT IT HAS HAD NO EXPERIENCE IN DESIGNING OR PRODUCING UNITS REQUIRING 4 WHEEL DRIVE, OR HYDRAULIC SYSTEMS, OR UNITS NEAR THE WEIGHT (50,000 POUNDS), AND THE UNIT PRICE (APPROXIMATELY $30,000), OF THE PROPOSED TRACTOR.

OTHER MATTERS WERE CONSIDERED BY THE SURVEY TEAM INCLUDING THE EXPERIENCE OF YOUR KEY PERSONNEL, YOUR SOURCES OF SUPPLY, YOUR FINANCIAL ABILITY, YOUR RECORD OF PERFORMANCE UNDER OTHER GOVERNMENT CONTRACTS, YOUR APPARENT WILLINGNESS TO COMPLY WITH THE NON DISCRIMINATION LABOR POLICIES OF THE GOVERNMENT AND THE FACT THAT YOUR COMPANY IS A SUBSIDIARY OF DYNAMICS CORPORATION OF AMERICA, THE SUBSIDIARIES OF WHICH ARE MOSTLY ENGAGED IN THE MANUFACTURE OF ELECTRONIC EQUIPMENT WITH PLANTS LOCATED IN THE UNITED STATES AND ENGLAND.

THE CONTRACTING OFFICER DETERMINED SPECIFICALLY IN REGARD TO THIS PROPOSED PROCUREMENT THAT YOUR FIRM IS NOT A MANUFACTURER AS DEFINED IN SUBSECTION 12-603.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THAT YOUR FIRM IS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR AS MEASURED BY THE STANDARDS PRESCRIBED BY ASPR 1-903.1 THROUGH 903.4; AND THAT HE COULD NOT MAKE AN AFFIRMATIVE DETERMINATION, AS REQUIRED UNDER ASPR 1-904.1, THAT YOUR FIRM IS RESPONSIBLE WITHIN THE MEANING OF ASPR 1-902 AND ASPR 1- 903.

IN A LETTER DATED JUNE 26, 1963, TO OUR OFFICE, YOU CONTENDED THAT THE AWARD TO THE CLARK EQUIPMENT COMPANY WAS NOT MADE IN ACCORDANCE WITH THE BID EVALUATION PROVISION OF THE INVITATION; AND THAT THE PREAWARD SURVEY OF YOUR COMPANY WAS NEITHER FAIR-MINDED, REASONABLE NOR COMPLETE IN ACCORDANCE WITH 1-905.3 AND 1-905.4, ASPR. THOSE SUBSECTIONS OF THE ARMED SERVICES PROCUREMENT REGULATION DISCUSS POSSIBLE AVAILABLE SOURCES OF INFORMATION REGARDING THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS, AND THE MATTER OF INSPECTIONS OF PLANTS AND FACILITIES WHEN THE MENTIONED POSSIBLE SOURCES OF INFORMATION DO NOT YIELD SUFFICIENT INFORMATION TO ENABLE CONTRACTING OFFICERS TO MAKE DETERMINATIONS OF RESPONSIBILITY.

THE BID EVALUATION PROVISION OF THE INVITATION CANNOT BE REGARDED AS HAVING REQUIRED, CONTRARY TO SECTION 2305, PARAGRAPH (C) OF TITLE 10, U.S.C. THAT THE CONTRACT BE AWARDED TO THE LOWEST BIDDER REGARDLESS AS TO ANY QUESTION AS TO HIS RESPONSIBILITY. NOR DO WE AGREE WITH YOUR CONTENTION THAT IT WAS NECESSARY FOR THE INVITATION TO HAVE CONTAINED AN EXPERIENCE REQUIREMENT IN ORDER TO DISQUALIFY YOUR BID ON THE BASIS OF A REASONABLE BELIEF THAT YOUR COMPANY DID NOT HAVE THE NECESSARY FACILITIES, EXPERIENCE OR TECHNICAL ABILITY TO PRODUCE TRACTORS OF THE TYPE REQUIRED STRICTLY IN ACCORDANCE WITH THE ADVERTISED SPECIFICATIONS, AND TO MAKE TIMELY DELIVERIES. EXPERIENCE REQUIREMENTS ARE SOMETIMES CONTAINED IN BID INVITATIONS BUT THEY ARE NOT GENERALLY NECESSARY AND COULD BE REGARDED IN SOME CASES AS BEING UNDULY RESTRICTIVE OF COMPETITION. THAT IS ONE OF THE POINTS DISCUSSED IN 39 COMP. GEN. 173, WHICH DECISION HAS BEEN REFERRED TO IN CONNECTION WITH YOUR SECOND CONTENTION THAT THE PREAWARD SURVEY WAS NEITHER FAIR-MINDED, REASONABLE NOR COMPLETE.

IT IS STATED IN 39 COMP. GEN. 173, AT PAGES 177 AND 178, THAT REJECTION OF THE LOWEST BIDDER ON THE GROUND OF LACK OF RESPONSIBILITY MUST BE BASED UPON A FULL AND HONEST INVESTIGATION OF THE QUALIFICATIONS OF THE BIDDER, OR SUPPORTED BY A FINDING THAT THE BIDDER WAS SO LACKING IN EXPERIENCE, FINANCIAL ABILITY, MACHINERY AND FACILITIES NECESSARY TO PERFORM THE CONTRACT AS TO JUSTIFY A BELIEF ON THE PART OF FAIR-MINDED AND REASONABLE MEN THAT THE BIDDER WOULD NOT BE ABLE TO PERFORM THE CONTRACT.

YOU ALLEGED THAT THE APPOINTMENT OF A FIVE-MAN PREAWARD SURVEY TEAM WITH AN OBSERVER FROM HEADQUARTERS, U.S. ARMY MOBILITY COMMAND, WAS UNUSUAL AND THAT THE RAPIDITY OF THE IMPLEMENTATION OF THE SURVEY, THE TONE AND NATURE OF THE CONDUCT OF THE SURVEY AND ITS INCOMPLETENESS LED TO A CONCLUSION ON YOUR PART THAT THE SURVEY WAS NOT AN IMPARTIAL FACT FINDING GROUP, BUT CONSISTED OF MEMBERS WHO WERE INTENT ON ESTABLISHING INCAPABILITY.

ADDITIONAL ALLEGATIONS WERE MADE IN YOUR LETTER DATED JUNE 26, 1963, AS FOLLOWS:

1. PRIOR TO THE SURVEY ONE OF YOUR MAJOR PROSPECTIVE SUPPLIERS OF COMPONENTS FOR THE TRACTOR WAS APPROACHED BY TELEPHONE BY A MEMBER OF THE CORPS OF ENGINEERS IN THE CHICAGO AREA WHO WAS SEEKING INFORMATION THAT COULD PROVE YOUR COMPANY TO BE INCAPABLE OF PERFORMANCE.

2. THE SURVEY TEAM WAS POORLY PREPARED FOR THE SURVEY AT THE TIME OF ITS ARRIVAL AT YOUR PLANT ON JUNE 4, 1963. ONE LENGTHY CONVERSATION OCCURRED DURING THE SURVEY WHICH CONCERNED QUALITY CONTROL AND INSPECTION PROCEDURES AND TWO MEMBERS OF THE TEAM SEVERELY CRITICIZED YOUR PERSONNEL FOR NOT BEING PREPARED OR NOT BEING COGNIZANT OF THE SPECIFICATION INVOLVED (MIL-I-45208), ONLY TO BE SHOWN THAT THIS PARTICULAR PHASE WAS NOT EVEN A PART OF THE REQUIREMENTS OF THE INVITATION FOR BIDS, HAVING BEEN DELETED BY AMENDMENT NO. 1 PRIOR TO THE SCHEDULED BID OPENING TIME.

3. THE SURVEY TEAM SPENT LESS THAN FOUR HOURS IN ACTUAL FACT FINDING BETWEEN THE TIME OF ARRIVAL AT YOUR MAIN PLANT, 11:00 A.M., AND THE TIME FOR DEPARTURE, 5:00 P.M., JUNE 4, 1963.

4. YOU WERE NOT PERMITTED TO PRESENT YOUR PLANNED PROGRAM FOR COMPLETE IMPLEMENTATION AND ONLY LIMITED TIME WAS GRANTED FOR YOUR ANSWERED BUT THE SCOPE OF THE QUESTIONS WAS EXTREMELY LIMITED DUE TO PRESSURE EXERTED BY THE SURVEY TEAM.

5. THE SURVEY TEAM DECLINED TO VISIT REEVES INSTRUMENT CORPORATION, ANOTHER SUBSIDIARY OF DYNAMICS CORPORATION OF AMERICA, WHOSE FACILITIES YOU INTENDED TO USE AS A BACKUP SOURCE FOR YOUR MECHANICAL GEARING AND MACHINING. THE SURVEY TEAM ALSO DECLINED TO VISIT A FACILITY AT FARMINGDALE, NEW JERSEY, WHICH WAS AVAILABLE TO YOUR FIRM IF REQUIRED FOR IMPLEMENTATION OF YOUR MANUFACTURING PROGRAM. (IT IS UNDERSTOOD THAT THE TWO FACILITIES ARE ABOUT 30 AND 50 MILES FROM RAMAPO, NEW YORK, WHERE YOUR PLANT IS LOCATED.)

6. REGARDLESS OF THE FINDINGS OF THE SURVEY TEAM YOUR COMPANY MEETS THE REQUIREMENTS OF ASPR 1-903.2 THAT THE PROSPECTIVE CONTRACTOR HAVE THE NECESSARY ORGANIZATION, EXPERIENCE, OPERATIONAL CONTROLS, AND TECHNICAL SKILLS, OR THE ABILITY TO OBTAIN THEM; AND IT HAS THE NECESSARY PRODUCTION, CONSTRUCTION AND TECHNICAL EQUIPMENT AND FACILITIES, OR THE ABILITY TO OBTAIN THEM.

7. PERFORMANCE BY YOUR COMPANY WAS GUARANTEED BY AN UNPRECEDENTED ACTION BY THE BOARD OF DIRECTORS OF DYNAMICS CORPORATION OF AMERICA. RESOLUTION OF THE BOARD ON JUNE 6, 1963, COMPLETE FINANCIAL ASSISTANCE WAS GUARANTEED, AS WELL AS COMPLETE FACILITIES AND ENGINEERING ASSISTANCE IF REQUIRED.

WE RECEIVED AN ADMINISTRATIVE REPORT ON YOUR PROTEST FROM THE DEPARTMENT OF THE ARMY AND YOU WERE AFFORDED AN OPPORTUNITY TO REVIEW THE REPORT AND ITS ACCOMPANYING PAPERS. YOU SUBMITTED A PREPARED STATEMENT IN REPLY TO THE ARMY REPORT WITH A LETTER DATED JULY 26, 1963, CONTENDING THAT THE AWARD DECISION WAS REACHED ON THE BASIS OF AN INCOMPLETE AND ERRONEOUS REPORT OF SURVEY, THAT SOME PHASES OF THE SURVEY WERE CONDUCTED IN AN ARBITRARY AND CAPRICIOUS MANNER WITH THE FULL INTENT OF DISCREDITING THE CAPABILITIES OF YOUR COMPANY, AND THAT IT WAS EVIDENT THAT FAVORITISM WAS SHOWN BY THE ARMY IN MAKING THE AWARD TO THE CLARK EQUIPMENT COMPANY.

THE PREPARED STATEMENT IN THE MATTER TOOK EXCEPTION TO THE RULING OF THE CONTRACTING OFFICER THAT YOUR COMPANY IS NOT A MANUFACTURER ACCORDING TO ASPR 12-603.1, WHICH RELATES TO ONE OF THE REQUIREMENTS OF THE WALSH- HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45, MADE APPLICABLE TO ALL CONTRACTS FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, ARTICLES, SUPPLIES AND EQUIPMENT IN ANY AMOUNT EXCEEDING $10,000 ENTERED INTO PURSUANT TO INVITATIONS FOR BIDS ISSUED SINCE THE LATTER PART OF THE YEAR 1936. YOU CONTENDED THAT THIS POINT WAS AN ATTEMPT TO PROVE YOUR INABILITY BY A DUBIOUS DEFINITION IN AN ACT PERTINENT TO SUCH MATTERS AS MINIMUM WAGES, MINIMUM HOURS, CHILD LABOR, CONVICT LABOR AND SAFE AND SANITARY WORKING CONDITIONS. HOWEVER, THE LEGISLATIVE HISTORY OF THE ACT SHOWS SECTION 1 THEREOF AS HAVING BEEN INTENDED TO ELIMINATE THE EVIL OF BID BROKERAGE AND BID PEDDLING (SEE 39 COMP. GEN. 254), AND IT IS OUR OPINION THAT THE CONTRACTING OFFICER WAS BOUND TO TAKE NOTICE OF THE PROVISIONS OF SUBSECTION 12-603.1, ASPR, IN DETERMINING YOUR QUALIFICATIONS IN THIS CASE. ASIDE FROM THE QUESTION REGARDING YOUR QUALIFICATION AS A MANUFACTURER WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, IT APPEARS THAT THE THREE SEPARATE SURVEY REPORTS ON YOUR COMPANY FULLY CONSIDERED THE VARIOUS OTHER MINIMUM STANDARDS SET FORTH IN SECTION 1-903, ASPR, WHICH MUST BE MET BY A BIDDER TO QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR, INCLUDING PARTICULARLY THE NECESSITY FOR DETERMINATION THAT THE BIDDER IS CAPABLE OF MEETING DELIVERY REQUIREMENTS; THAT THE BIDDER HAS THE NECESSARY ORGANIZATION, EXPERIENCE, OPERATIONAL CONTROLS AND TECHNICAL SKILLS, OR THE ABILITY TO OBTAIN THEM; AND THAT THE BIDDER HAS THE NECESSARY PRODUCTIVE, CONSTRUCTION AND TECHNICAL EQUIPMENT AND FACILITIES, OR THE ABILITY TO OBTAIN THEM. IT IS YOUR CONTENTION THAT YOU COULD MEET YOUR PROPOSED DELIVERY SCHEDULE AND THAT, BY ANY REASONABLE STANDARD, YOU HAVE THE CAPABILITY TO PERFORM THE PROPOSED TRACTOR CONTRACT, INCLUDING THE ABILITY TO OBTAIN ANY REQUIRED EQUIPMENT AND FACILITIES OR ADDITIONAL QUALIFIED TECHNICAL PERSONNEL.

THE MEMBERS OF THE SURVEY TEAM HAVE ADMITTED THAT THE TIME SPENT AT YOUR PLANT WAS NOT CONSIDERABLE BUT MAINTAIN THAT IT WAS SUFFICIENT TO ASCERTAIN YOUR CAPABILITY OR LACK OF CAPABILITY TO DESIGN AND MANUFACTURE THE TRACTORS STRICTLY IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS AND TO MEET DELIVERY REQUIREMENTS.

THEY DENY THAT THEY WERE NOT ADEQUATELY PREPARED FOR THE SURVEY ALTHOUGH IT IS TRUE THAT THEY WERE MISTAKEN IN REGARD TO THE APPLICABILITY OF MILITARY SPECIFICATION MIL-I-45208 TO THE PROPOSED PROCUREMENT. THEY HAVE INDICATED, HOWEVER, THAT THEIR INQUIRY WAS OF A GENERAL NATURE AND THAT THEY WERE SURPRISED THAT YOUR REPRESENTATIVES DID NOT HAVE KNOWLEDGE OF THE SPECIFICATION SINCE IT IS ONE OF THE TWO BASIC MILITARY SPECIFICATIONS DEALING WITH QUALITY CONTROL AND INSPECTION PROCEDURES RELATING TO GOVERNMENT CONTRACTS FOR THE PRODUCTION OF VARIOUS ITEMS RELATING TO GOVERNMENT CONTRACTS FOR THE PRODUCTION OF VARIOUS ITEMS OF CONSTRUCTION AND OTHER EQUIPMENT.

THE MEMBERS OF THE SURVEY TEAM HAVE ALSO ADMITTED THAT THEY DECLINED AN INVITATION TO VISIT THE PLANT OF THE REEVES INSTRUMENT CORPORATION, BUT THEY MAINTAIN THAT CAREFUL CONSIDERATION WAS GIVEN TO YOUR COMPLETE PLAN OF OPERATION. THEY DID NOT BELIEVE THAT IT WAS NECESSARY TO VISIT THE PLANT OF AN AFFILIATED CONCERN FOR THE PURPOSE OF DETERMINING YOUR CAPABILITY, PARTICULARLY SINCE THEY WERE ADVISED THAT ALL PRODUCTION AND ASSEMBLY WOULD BE PERFORMED AT YOUR RAMAPO, NEW YORK, PLANT, AND THAT AN ADDITIONAL LEASED FACILITY IN NEW JERSEY WOULD BE USED TO SOME EXTENT (YOUR PLANTS NOS. 1 AND 3). THEY ALSO TOOK INTO CONSIDERATION THE FACT THAT THE REEVES INSTRUMENT CORPORATION IS NOTA MANUFACTURER OF HEAVY CONSTRUCTION EQUIPMENT OR ITEMS SIMILAR TO THE TRACTOR WHICH THE GOVERNMENT INTENDED TO PURCHASE.

IN CONNECTION WITH YOUR GENERAL ALLEGATIONS OF PREJUDICE ON THE PART OF THE SURVEY TEAM AND THE CHICAGO PROCUREMENT OFFICE, YOUR PREPARED STATEMENT SUBMITTED ON JULY 26, 1963, REFERS TO THE FACT THAT THE DOCUMENTS AND CORRESPONDENCE ACCOMPANYING THE ADMINISTRATIVE REPORT ON YOUR PROTEST SHOW ONLY A DENIAL BY SOME OF THE MEMBERS OF THE SURVEY TEAM OF ANY KNOWLEDGE CONCERNING THE TELEPHONE CALL ALLEGEDLY RECEIVED BY YOUR SUPPLIER FROM A REPRESENTATIVE OF THE CORPS OF ENGINEERS IN THE CHICAGO AREA PRIOR TO THE VISIT OF THE SURVEY TEAM TO YOUR PLANT IN RAMAPO, NEW YORK. ON THAT POINT, IT WAS SUBSEQUENTLY REPORTED BY THE DEPARTMENT OF THE ARMY THAT THE CONTRACTING OFFICER AND THE ENGINEER PROCUREMENT OFFICE HAVE NO KNOWLEDGE OF ANY CONTACT MADE BY AN INDIVIDUAL IN THAT OFFICE WITH A SUPPLIER OF YOUR COMPANY PRIOR TO THE PREAWARD SURVEY OF YOUR PLANT.

IN RESPONSE TO A REQUEST FOR COMMENTS ON CERTAIN OTHER ISSUES RAISED IN YOUR PREPARED STATEMENT, THE DEPARTMENT OF THE ARMY HAS REPORTED THAT YOUR MODEL 12000 MC-1 VACUUM CLEANER DOES NOT COMPARE WITH THE TRACTOR IN QUESTION IN COMPLEXITY OF DESIGN OR SEVERITY OF USE; THAT DOLLIES CAN BE USED FOR THE FINAL ASSEMBLY OF TRACTORS BUT IT WOULD BE IMPRACTICAL TO USE THEM THROUGHOUT THE PLANT FOR UNLOADING AND MOVING OF RAW MATERIALS, WELDMENTS, AND HEAVY COMPONENTS IN THE SUB-ASSEMBLY AREAS; THAT YOUR PRESENT 5-TON OVERHEAD CRANE IS NOT ADEQUATE TO HANDLE RAW MATERIALS AND WELDMENTS IN THE PROPOSED SUB ASSEMBLY AREAS; AND THAT YOUR COMPARISON BETWEEN YOUR AVAILABLE MANUFACTURING SPACE AND THAT OF THE CATERPILLAR TRACTOR COMPANY ARE NOT VALID. WE WERE FURTHER ADVISED THAT THE REEVES AND FARMINGDALE PLANTS WERE CASUALLY REFERRED TO BY MR. ALLEN IN HIS OPENING REMARKS TO THE SURVEY TEAM BUT THAT THE TEAM WAS INFORMED ALSO THAT "ALL PRODUCTION AND ASSEMBLY WOULD BE ACCOMPLISHED AT THEIR RAMAPO, NEW YORK PLANT (PLANTS 1 AND 3).' IT IS STATED BY THE DEPARTMENT THAT DETAILED INFORMATION INCLUDING FLOOR PLANS OF PRODUCTION AREAS, WERE FURNISHED THE SURVEY TEAM AND THIS DID NOT INCLUDE ANY OF THE REEVES OR FARMINGDALE FACILITIES.

WITH RESPECT TO YOUR ALLEGATION OF PREJUDICE REGARDING THE DIFFERENCE BETWEEN THE COMPOSITION OF THE SURVEY TEAMS WHICH VISITED YOUR PLANT AND THAT OF THE CLARK EQUIPMENT COMPANY, AND APPARENT DIFFERENCES BETWEEN THE EMPHASIS PLACED UPON THE ABILITY TO OBTAIN NECESSARY SUPPLIES, EQUIPMENT, PERSONNEL, ETC., IN THE TWO SURVEY REPORTS, THE DEPARTMENT OF THE ARMY INDICATED THAT THE SURVEY OF THE CLARK EQUIPMENT COMPANY'S PLANT WAS NOT AS THOROUGH AS THE ONE PERFORMED AT YOUR PLANT BECAUSE THE CLARK EQUIPMENT COMPANY HAS HAD A CONSIDERABLE AMOUNT OF EXPERIENCE IN THE MANUFACTURE OF TRACTORS AND THE CONTRACTING OFFICER HAD KNOWLEDGE OF ITS PRODUCTION CAPABILITIES AND PAST PERFORMANCE UNDER GOVERNMENT CONTRACTS WITH THAT FIRM FOR EQUIPMENT SIMILAR TO THE TRACTORS WHICH WERE PROPOSED TO BE PURCHASED.

YOU SUGGESTED THAT THE REPORTS OF SURVEY SHOW THAT A PRECONCEPTION ON THE PART OF THE MEMBERS OF THE SURVEY TEAM AS TO HOW THE TRACTORS WERE TO BE PUT TOGETHER PERMEATED THEIR ENTIRE THINKING. IN THAT CONNECTION, NEITHER THE CONTRACTING OFFICER NOR THE DEPARTMENT OF THE ARMY HAS DENIED THAT THEY WERE NOT CONCERNED WITH THE QUESTION AS TO WHETHER IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO MAKE THE AWARD TO A CONCERN WHICH IS PRIMARILY AN ASSEMBLER OF COMPONENTS MANUFACTURED BY OTHERS. IT APPEARS HOWEVER, THAT THE MEMBERS OF THE SURVEY TEAM WERE FULLY COGNIZANT OF THEIR RESPONSIBILITY TO SUBMIT TO THE CONTRACTING OFFICER A TRUE STATEMENT CONCERNING THE ADEQUACY OF YOUR PLANT, THE EXPERIENCE OF YOUR COMPANY AND THAT OF ITS KEY PERSONNEL, YOUR PLAN OF OPERATION, ETC., SO THAT THE CONTRACTING OFFICER WOULD BE IN A POSITION TO MAKE AN INDEPENDENT JUDGMENT WITH RESPECT TO YOUR CAPABILITY OR LACK OF CAPABILITY TO PERFORM THE SPECIFICALLY PROPOSED CONTRACT. CONSIDERING THE POSSIBILITY THAT THE CONTRACTING OFFICER MAY HAVE BEEN MISLED BY ERRONEOUS STATEMENTS MADE IN THE SURVEY REPORTS, IT WAS SUGGESTED TO YOUR REPRESENTATIVES THAT A FURTHER REVIEW OF THE FINDINGS IN THE SURVEY REPORTS, PARTICULARLY THOSE AS SET FORTH IN AN ADDENDUM DATED JUNE 7, 1963, BE MADE BY YOUR COMPANY, AND THAT WE BE ADVISED WHEREIN SUCH FINDINGS WERE CONSIDERED TO BE COMPLETELY ERRONEOUS.

IN THE JUNE 7, 1963, ADDENDUM, IT WAS STATED THAT YOUR COMPANY EXPECTS TO COMPLETE THE DESIGN WITHIN 18 WEEKS AFTER AWARD OF CONTRACT AND START ORDERING MATERIAL IN THE 23RD WEEK; THAT INTERNATIONAL FERMONT, INC., IS PRIMARILY AN ASSEMBLER AND THIS IS THE METHOD IT INTENDS TO USE ON THIS PROCUREMENT. YOUR DIRECTOR OF ENGINEERING HAS EXPERIENCE IN THE GENERAL ELECTRICAL FIELD BUT HAS HAD LITTLE OR NO EXPERIENCE IN THE HEAVY CONSTRUCTION MACHINERY FIELD. THE PROPOSED PROGRAM MANAGER'S BACKGROUND IS ALSO IN THE ELECTRICAL FIELD, WITH SOME EXPERIENCE IN THE MANUFACTURE OF SPECIALIZED VEHICLES. THE PROJECT CHIEF ENGINEER IS A MECHANICAL ENGINEER WITH EXPERIENCE IN POWER PLANT DESIGN, HAVING DESIGNED AND DEVELOPED SPECIAL GEAR TRAINS AND POWER TRANSMISSIONS FOR MATERIAL HANDLING EQUIPMENT BUT HIS EXPERIENCE PROSPECTUS DOES NOT SHOW THE EXACT TYPE OF EQUIPMENT. THE SURVEY TEAM WAS ADVISED THAT YOU INTENDED TO USE SIX ENGINEERS FOR DESIGN AND THAT YOU WOULD ALSO UTILIZE ENGINEERS FROM YOUR PROPOSED MAIN COMPONENT SUPPLIERS IF REQUIRED. YOUR DRAFTING ROOM IS VERY SMALL (2,172 SQUARE FEET), AND ADDITIONAL SPACE WOULD BE REQUIRED TO ACCOMMODATE AN ESTIMATED TOTAL OF 44 ENGINEERS AND DRAFTSMEN. YOU WOULD NOT MAKE A DEFINITE STATEMENT AS TO WHICH SUPPLIER YOU INTENDED TO USE TO SUPPLY THE MAIN COMPONENTS OF THE TRACTOR BUT YOU DID NAME TWO OR MORE PROSPECTIVE SUPPLIERS OF MAIN COMPONENTS FOR EACH ITEM. IT WAS YOUR INTENTION TO USE ENGINES, TRANSMISSIONS, AXLES, TORQUE CONVERTERS, GEAR GROUP TRANSFER BOX, UNIVERSAL HITCH, ETC., FROM QUALIFIED SOURCES. YOUR COMPANY POLICY IS TO USE COMPONENTS WHICH MUST WORK AND BE COMPATIBLE BUT LOW COST OF COMPONENTS IS THE MAIN CONSIDERATION. YOUR PRESENT CONTRACTS FOR GENERATORS ARE EXPECTED TO BE COMPLETED IN DECEMBER, 1963, AT THE RAMAPO, NEW YORK, PLANT NO. 1 LOCATION. YOU EXPECTED TO UTILIZE 62,660 SQUARE FEET OF SPACE IN THE PRODUCTION OF THE TRACTORS AND YOU HAD ONLY NINE CERTIFIED WELDERS BUT EXPECTED TO USE APPROXIMATELY 40 WELDERS AND ABOUT 20 HELPERS ON FRAMES, CASTINGS, FORGINGS, ETC. THE PRESENT PLANT WOULD PRODUCE ALL WELDMENTS AND THE COMPANY DOES NOT OWN ANY AUTOMATIC WELDING EQUIPMENT NOR SUFFICIENT PORTABLE WELDING MACHINES TO ACCOMODATE 40 OR MORE PROPOSED WELDERS. YOU INTENDED TO SUBCONTRACT X-RAY REQUIREMENTS FOR CASTINGS.

UNDER THE HEADING "COMMENTS" AT PARAGRAPH 10 OF THE ADDENDUM TO THE SURVEY REPORT, VARIOUS ADDITIONAL FINDINGS WERE MADE WHICH INCLUDE THE FOLLOWING: (1) YOUR PROPOSED WELDING AND ASSEMBLY SPACE IS ENTIRELY INADEQUATE--- 15,893 SQUARE FEET; (2) YOUR PLANT HAS ONE OVERHEAD CRANE OF 5-TON CAPACITY AND ADDITIONAL OVERHEAD CRANES OR STIFF-LEG DERRICKS ARE REQUIRED FOR MOVING AND POSITIONING WELDMENTS, AXLES, TRANSMISSIONS, ENGINES, ETC., WITH THE WEIGHT OF THE ENGINE BEING ABOUT 7,000 POUNDS AND THE WEIGHT OF THE FRAME BEING ABOUT 10,000 POUNDS; (3) AUTOMATIC WELDING IS REQUIRED FOR TRACTOR FRAMES, ETC., AND WELDING POSITIONERS FOR THE VARIOUS COMPONENTS ARE REQUIRED; (4) THE SPACE ALLOCATED FOR TRACTOR ASSEMBLY IS CONSIDERED INADEQUATE--- 21,133 SQUARE FEET; (5) YOUR ENGINEERING ABILITY AND CAPABILITY OF YOUR ORGANIZATION IS QUESTIONABLE, SINCE THERE IS A DEFINITE LACK OF SUFFICIENTLY QUALIFIED ENGINEERS EXPERIENCED IN HEAVY CONSTRUCTION EQUIPMENT DESIGN; (6) THE PROPOSED STORAGE SPACE IS INADEQUATE, SINCE STEEL AND HARDWARE FOR THE TRACTOR CONTRACT WOULD WEIGH OVER 30,000,000 POUNDS, AND ON A MONTHLY BASIS THIS WOULD AMOUNT TO 900 TONS, FOR WHICH YOU INTENDED TO USE 8,337 SQUARE FEET OF INSIDE STORAGE SPACE AND 111,383 SQUARE FEET OF OUTSIDE STORAGE SPACE; (7) YOUR LIST OF MACHINE TOOLS IS ENTIRELY INADEQUATE AND THERE ARE NO TOOLS AVAILABLE, SUCH AS LATHES, SHAPERS, MILLING MACHINES, HEAVY DRILL PRESSES, ETC., AND, EVEN IF THEY WERE AVAILABLE, THERE WOULD BE NO SPACE TO SET THEM UP FOR OPERATION, AS THE SPACE WAS ALLOCATED TO OTHER PURPOSES; (8) THERE IS NO TEST EQUIPMENT ON HAND AND IT WAS NOT KNOWN IF THE EQUIPMENT WAS READILY AVAILABLE; (9) NO SANDBLAST EQUIPMENT WAS ON HAND NOR WERE THERE ANY SOLVENT TANKS OF A SIZE REQUIRED FOR TRACTOR COMPONENTS; (10) THE ALLOCATED PAINTING SPACE OF 4,640 SQUARE FEET WAS INADEQUATE, YOUR ALLOCATED ELECTRICAL SPACE WAS 3,324 SQUARE FEET AND NO SPACE WAS ALLOCATED FOR ANY MACHINE OPERATIONS; (11) THERE IS NO HYDRAULIC TEST EQUIPMENT AVAILABLE FOR PUMPS, VALVES, BASES, COUPLINGS, ETC.; AND (12) YOUR QUALITY CONTROL SYSTEM, MIL-Q-9858, HAS BEEN APPROVED FOR GENERATOR PRODUCTION BUT IT WOULD, OF NECESSITY, HAVE TO BE REVISED TO MEET THE SPECIFICATION REQUIREMENTS FOR THIS PROCUREMENT.

THERE FOLLOWS IN THE ADDENDUM A LISTING OF YOUR PROPOSED 13 STEPS FOR PRODUCTION OF THE TRACTORS, WHICH HAVE BEEN INDICATED AS THE SAME AS THOSE EMPLOYED BY THE CATERPILLAR TRACTOR COMPANY IN THE PRODUCTION OF THE MODEL USED IN CONNECTION WITH THE PREPARATION OF THE ADVERTISED SPECIFICATIONS IN THIS CASE. THE ADDENDUM COMMENTS ON YOUR PROPOSED INSPECTION PROCEDURES AND IN ITS CONCLUDING PARAGRAPHS, THE FOLLOWING STATEMENTS WERE MADE:

"16. IT IS TO BE NOTED THAT MR. ANDREW LOZYNIAK, WHO SIGNED THE BID FOR INTERNATIONAL FERMONT, IS NOT A CORPORATE OFFICER OF DYNAMICS CORPORATION OF AMERICA.

"17. OUR ESTIMATE OF ENGINEERS' DESIGN, LAYOUT DETAILERS, ETC., REQUIRED TO ACCOMPLISH THE ENGINEERING, ASSEMBLY AND TESTING FACET OF THIS CONTRACT, IS APPROXIMATELY 100. THIS IS BASED UPON THE NUMBER OF PROFESSIONAL ENGINEERS AND TECHNICIANS USED BY OTHERS BUILDING RELATIVELY THE SAME UNIT. THIS ESTIMATE DOES NOT INCLUDE TEST ENGINEERS.

"18. IT IS OUR CONSIDERED OPINION THAT THE COMPANY IS NOT QUALIFIED TO PERFORM UNDER THE PROPOSED CONTRACT FOR THE REASONS CITED IN THIS REPORT.

"19. IN ADDITION, THE COMPANY DOES NOT QUALIFY AS A MANUFACTURER (UNDER ASPR 12-603.1), SINCE THEY DO NOT PRODUCE AND HAVE NOT PRODUCED MATERIALS, SUPPLIES, ARTICLES OR EQUIPMENT REQUIRED UNDER THE CONTRACT OF A GENERAL CHARACTER DESCRIBED IN THE SPECIFICATIONS.

"20. IT IS DIFFICULT TO UNDERSTAND HOW A LIGHT EQUIPMENT COMPANY, SUCH AS THE BIDDER, CAN SUDDENLY BECOME EFFICIENT ENOUGH TO DESIGN, MANUFACTURE, ASSEMBLE AND TEST EQUIPMENT AS COMPLEX AS THE 830M TRACTOR, REQUIRED ON THIS PROCUREMENT. FROM THE ABOVE REVIEW, IT IS OUR OPINION THAT AN AWARD TO THIS CONTRACTOR WILL RESULT IN A DELINQUENT CONTRACT AND A PRODUCT OF QUESTIONABLE END USE. IT IS, THEREFORE, STRONGLY RECOMMENDED THAT AN AWARD NOT BE MADE TO INTERNATIONAL FERMONT, INC., FOR THE REASONS CITED IN THIS SURVEY.' YOU SUBMITTED YOUR ADDITIONAL COMMENTS CONCERNING THE MATTER BY LETTER DATED AUGUST 21, 1963. FIRST, IT IS STATED THAT THE ADDENDUM REFLECTS A PREJUDICED OPINION AND GROSS ERRORS IN STATEMENTS REGARDING THE STORAGE SPACE, REFUSAL TO IDENTIFY MAIN COMPONENTS, COMPANY POLICY, TYPE OF EQUIPMENT REQUIRED, ENGINEERING CAPABILITY, ETC.

IN COMMENTING ON THE NUMBERED PARAGRAPH 17 ABOVE, IT IS ARGUED THAT THE SURVEYORS ATTEMPTED TO IMPOSE UPON YOUR COMPANY THE REQUIREMENT TO PERFORM THE CONTRACT IN ACCORDANCE WITH THE ESTABLISHED ORGANIZATION AND TYPE OF ENGINEERING OF ANOTHER MANUFACTURER, ALTHOUGH THE INVITATION FOR BID INCLUDES NO STIPULATION THAT THE SUCCESSFUL BIDDER WOULD HAVE AN ORGANIZATION SIMILAR TO THAT OF THE PREVIOUS SUCCESSFUL BIDDER (THE CATERPILLAR TRACTOR COMPANY). YOU CONTENT THAT ANY EVALUATION SHOULD HAVE BEEN BASED ON THE METHOD USED BY YOU TO ACCOMPLISH THE ENGINEERING TASK; THAT THE SURVEY TEAM DID NOT CONCLUDE THAT FERMONT DID NOT HAVE THE NECESSARY ORGANIZATION, EXPERIENCE, ETC., BUT RATHER THEY CONCLUDED THAT YOUR COMPANY DID NOT MEET THE ORGANIZATIONAL REQUIREMENTS AND TECHNICAL EXPERIENCE OF THE PREVIOUS PRODUCER OF THE SUBJECT TRACTORS.

CONCERNING THE QUESTIONED AMOUNT OF WELDING AND ASSEMBLY SPACE, IT IS STATED THAT ALLOCATIONS OF 6,240 SQUARE FEET AND 9,653 SQUARE FEET WERE MADE FOR SHEET METAL WORK AND WELDING SPACE; AND THAT THE SIZES OF THE TWO CHASSIS FRAMES WERE APPROXIMATELY 15 FEET BY 7 FEET AND 5 FEET BY 7 FEET. IT IS ALSO STATED THAT, WITH THE ALLOCATION OF A PERIPHERAL WORKING AREA OF 5 FEET BETWEEN EACH FRAME, IT CAN BE DISCERNED READILY THAT APPROXIMATELY 24 FULL FRAMES CAN BE WELDED AT ANY ONE TIME AND, AT A PRODUCTION RATE OF TWO PER DAY TO MEET THE DELIVERY SCHEDULE, THE AREA (FOR WELDING) IS MORE THAN ADEQUATE. YOU STATE THAT THIS SAME LOGIC CAN BE UTILIZED IN DETERMINING THE AMOUNT OF SPACE REQUIRED FOR SHEET METAL OPERATION.

YOU CONTEND THAT IT WAS UNFAIR FOR THE SURVEYORS TO STATE THAT AUTOMATIC WELDING EQUIPMENT IS REQUIRED BECAUSE THE SUBJECT TRACTORS ARE NOT MANUFACTURED ON AN ASSEMBLY LINE BASIS IN THE SAME MANNER AS PASSENGER AUTOMOBILES BUT, RATHER, ARE TO A LARGE EXTENT INDIVIDUALLY BUILT AND THE TYPE OF OPERATION DOES NOT LEND ITSELF TO AUTOMATIC OPERATION, NOR CAN IT BE ASSUMED THAT THE LACK OF AUTOMATIC EQUIPMENT WOULD RESULT IN AN INFERIOR PRODUCT.

YOU DO NOT DENY THAT WELDING POSITIONERS FOR THE VARIOUS COMPONENTS ARE REQUIRED, BUT IT IS STATED AS A RECOGNIZED FACT THAT WELDING POSITIONERS (FIXTURES) ARE DESIGNED AND MANUFACTURED ON INDIVIDUAL WELDMENT DESIGN.

IT IS ALLEGED THAT YOUR REPRESENTATIVES WERE INVITED TWO DAYS AFTER BID OPENING TO VISIT THE CATERPILLAR PLANT IN PEORIA, ILLINOIS; THAT THIS FACT WAS MADE KNOWN TO THE SURVEY TEAM; AND THAT THE ACTUAL SPACE ALLOTED BY FERMONT TO THE ASSEMBLY OF TRACTORS (21,133 SQUARE FEET), IS GREATER THAN THAT USED BY THE CATERPILLAR TRACTOR COMPANY IN THE PERFORMANCE OF ITS PAST CONTRACT. IT IS ARGUED THAT THE SURVEY TEAM'S STATEMENT OF INADEQUACY IN THAT REGARD CAN ONLY BE INTERPRETED AS EITHER GROSS ERROR OR AN ATTEMPT OF THE TEAM MEMBERS TO DISCREDIT FERMONT'S CAPABILITY.

REGARDING THE MATTER OF STORAGE SPACE, IT IS YOUR CONTENTION THAT THE FIGURES USED BY THE SURVEY TEAM ARE IN GROSS ERROR. IT IS ALLEGED THAT THE STEEL AND HARDWARE WOULD AMOUNT TO LESS THAN 8,000,000 POUNDS AND, ON A MONTHLY BASIS THE QUANTITY WOULD BE 238 TONS, WHEREAS THE FIGURES USED WERE 30,000,000 POUNDS AND 900 TONS. FURTHER, ACCORDING TO YOUR LETTER, THE SURVEY TEAM FAILED TO TAKE INTO ACCOUNT 4,429 SQUARE FEET OF STORAGE SPACE AVAILABLE IN YOUR PLANTS NOS. 2 AND 3, AND THE FACT THAT IT IS NORMAL INDUSTRY PRACTICE TO STORE MATERIAL ON RACKS AND TO STORE COMPONENTS VERTICALLY. IT IS FURTHER CONTENDED THAT THE SURVEY TEAM WAS ADVISED THAT STORAGE AREAS WERE AVAILABLE WITHIN THE IMMEDIATE VICINITY OF YOUR PLANT. YOU INDICATE THAT A PROCEDURE FOR RENTING ADDITIONAL STORAGE SPACE HAD BEEN ESTABLISHED OVER THE PAST YEARS AND, DEPENDING UPON THE NEED, THE AMOUNT LEASED INCREASES OR DECREASES IN ACCORDANCE WITH GOOD MANAGEMENT PRACTICE.

WITH RESPECT TO THE ALLEGED INADEQUACY OF MACHINE TOOLS, IT IS YOUR POSITION THAT, SINCE YOUR METHOD OF PERFORMING THE CONTRACT WOULD BE BY ASSEMBLY, AN UNDUE EMPHASIS WAS PLACED BY THE SURVEY TEAM ON THE FACT THAT VARIOUS TYPES OF MACHINE TOOLS WERE NOT ON HAND OR ORDERED. IN THAT CONNECTION, IT IS ARGUED THAT ANY NECESSARY MACHINE TOOLS COULD BE OBTAINED WITH THE BACKING OF THE AMERICAN DYNAMICS CORPORATION THROUGH ITS SUBSIDIARY, THE REEVES INSTRUMENT CORPORATION.

IN REGARD TO TEST EQUIPMENT, IT IS ARGUED THAT GOOD BUSINESS PRACTICE PRECLUDES A MANUFACTURER FROM SECURING ALL REQUIRED TEST EQUIPMENT PRIOR TO AWARD, BUT THAT YOU HAD ASSURED YOURSELF PRIOR TO BIDDING THAT THE TEST EQUIPMENT WAS READILY AVAILABLE.

YOU QUESTION THE STATED WEIGHTS FOR ENGINE AND FRAME, INDICATING THAT THE TRACTOR ENGINE WOULD WEIGH ABOUT 3,500 OR 4,030 POUNDS, DEPENDING UPON WHICH OF TWO MANUFACTURED TYPES WOULD BE USED, AND THAT THE WEIGHT OF EACH OF THE TWO DISTINCT PIECES OF THE TRACTOR FRAME DOES NOT APPROACH 10,000 POUNDS.

IT IS ARGUED THAT THE ADVERTISED SPECIFICATIONS INSOFAR AS THEY RELATE TO QUALITY OF SURFACES WOULD NOT PERMIT THE USE OF SANDBLASTING EQUIPMENT; AND THAT, IF YOUR PRESENT SOLVENT TANKS NEED ENLARGEMENT, THIS WILL BE ACCOMPLISHED AS YOU HAVE DONE IN THE PAST.

WITH FURTHER REFERENCE TO TESTING, IT IS YOUR POSITION THAT THE SURVEY TEAM WAS UNJUSTIFIED IN IMPOSING A REQUIREMENT TO INDIVIDUALLY TEST COMPONENTS INASMUCH AS THE ADVERTISED SPECIFICATIONS STATE THAT THE SUPPLIER MAY UTILIZE HIS OWN FACILITY OR ANY COMMERCIAL LABORATORY ACCEPTABLE TO THE GOVERNMENT.

WE FIND NOTHING IN THE SURVEY REPORTS THEMSELVES TO WARRANT YOUR BELIEF THAT THE SURVEY TEAM DID NOT CONCLUDE IN EFFECT THAT YOUR COMPANY DOES NOT HAVE THE NECESSARY ORGANIZATION, EXPERIENCE AND FACILITIES TO PERFORM THE PROPOSED TRACTOR CONTRACT. UNDOUBTEDLY THEY HAD SOME KNOWLEDGE OF THE FACILITIES OF THE CATERPILLAR TRACTOR COMPANY, ITS METHODS AND ORGANIZATION BUT WE SEE NO PROPER BASIS FOR ASSUMING THAT SURVEYORS ATTEMPTED TO IMPOSE A REQUIREMENT THAT YOU HAVE THE SAME TYPE OF EXPERIENCE AND THE SAME TYPE OF ORGANIZATION AS THOSE POSSESSED BY THE CATERPILLAR TRACTOR COMPANY, OR FACILITIES EQUAL TO THOSE OF THE CATERPILLAR TRACTOR COMPANY OR ANY OTHER WELL KNOWN MANFACTURER OF TRACTORS. IT IS NEVERTHELESS DIFFICULT TO PERCEIVE HOW THE SURVEYORS COULD HAVE DISREGARDED THEIR KNOWLEDGE OF TRACTOR MANUFACTURING OPERATIONS IN DETERMINING YOUR CAPABILITIES, NOTWITHSTANDING THE FACT THAT YOUR COMPANY PROPOSED TO USE A METHOD OF MANUFACTURE WHICH INVOLVED PRIMARILY AN ASSEMBLY OF COMPONENTS. IN THAT CONNECTION, YOU HAVE MAINTAINED IN MEETINGS WITH OUR REPRESENTATIVES THAT A TRACTOR MANUFACTURER MUST RELY UPON A NUMBER OF SUPPLIERS AND THAT THEIR OPERATIONS CONSIST TO A CONSIDERABLE DEGREE IN THE ASSEMBLY OF COMPONENTS MANUFACTURED FOR THEM BY OTHER CONCERNS.

ALSO, REGARDLESS OF WHICH COMPANY RECEIVED THE CONTRACT AWARD, THE CONTRACTOR WOULD HAVE THE RESPONSIBILITY TO DESIGN THE TRACTOR, INSURE THAT THE TRACTORS BEING DELIVERED WERE IN STRICT ACCORDANCE WITH THE CONTRACT SPECIFICATIONS AND MAKE DELIVERIES IN ACCORDANCE WITH THE AGREED UPON DELIVERY SCHEDULE. THUS, IT APPEARS THAT FOR ALL INTENTS AND PURPOSES THE SURVEYORS HAD A RIGHT TO EXPECT THAT YOUR FACILITIES, EXPERIENCE AND OTHER QUALIFICATIONS BE IN CERTAIN MATERIAL RESPECTS SIMILAR TO THOSE OF A FIRM REGULARLY ENGAGED IN THE TRACTOR MANUFACTURING BUSINESS.

ACCORDING TO YOUR LATEST COMMUNICATION, THE SURVEYORS WERE MISTAKEN IN THEIR QUESTIONING OF THE ADEQUACY OF THE SPACES ALLOTTED IN YOUR PLANT FOR SHEET METAL WORK, WELDING AND ASSEMBLY OF THE TRACTORS, AND THEY MADE A GROSS ERROR IN ASSUMING THAT SPACE WOULD BE REQUIRED FOR THE STORAGE OF A TOTAL OF 30,000,000 POUNDS OF MATERIAL DURING CONTRACT PERFORMANCE WHICH WOULD AMOUNT TO 900 TONS ON A MONTHLY BASIS. WITH RESPECT TO THAT ALLEGED ERROR, IT IS NOT APPARENT THAT IT AFFECTED THEIR CONSIDERATION OF THE QUESTION OF THE ADEQUACY OF THE SPACE INVOLVED SINCE WE UNDERSTAND THAT THEY DID NOT CONSIDER THE STORAGE OF LARGE QUANTITIES OF THE NECESSARY STEEL AND HARDWARE IN THE OPEN WOULD BE FEASIBLE AND YOU INDICATED THAT 111,383 SQUARE FEET OF OUTSIDE STORAGE SPACE WAS AVAILABLE AS COMPARED WITH THE ALLOCATED INSIDE STORAGE SPACE OF 8,337 SQUARE FEET. IN ANY EVENT, THE 30,000,000-POUND FIGURE APPEARS TO HAVE INCLUDED THE APPROXIMATE WEIGHT OF ALL MATERIALS AND COMPONENTS WHICH WOULD HAVE TO BE STORED AT ONE TIME OR ANOTHER DURING CONTRACT PERFORMANCE. SINCE THE CONTRACT WOULD REQUIRE THE PRODUCTION OF 672 TRACTORS WEIGHING ABOUT 50,000 POUNDS EACH, THE TOTAL WEIGHT OF THE REQUIRED COMPONENTS AND MATERIALS WOULD APPROXIMATE OR EXCEED 33,600,000 POUNDS.

YOUR PLANTS NOS 2 AND 3 ARE LISTED IN AND DESCRIBED IN THE ORIGINAL SURVEY REPORTS AND THE REPORTS WERE ACCOMPANIED BY A STATEMENT SHOWING VARIOUS ALLOCATIONS OF SPACE WHICH INCLUDED 2,000 SQUARE FEET OF STORAGE SPACE AT YOUR PLANT NO. 2 AND 2,429 SQUARE FEET OF STORAGE SPACE AT YOUR PLANT NO. 3. THUS, IT IS APPARENT THAT THE CONTRACTING OFFICER KNEW OF THIS ADDITIONAL STORAGE SPACE WHEN HE MADE HIS DETERMINATION IN THE MATTER OF YOUR RESPONSIBILITY. ALSO, IT IS OUR OPINION THAT THE ALLEGED ERROR CONCERNING SUCH STORAGE SPACE CANNOT BE REGARDED AS HAVING BEEN SIGNIFICANT, CONSIDERING THAT THE SPACE INVOLVED IS RELATIVELY SMALL AND YOUR PLAN OF OPERATION INDICATED THAT YOU INTENDED TO STORE PRACTICALLY ALL OF THE NECESSARY MATERIALS, COMPONENTS AND SUPPLIES IN THE OPEN OR INSIDE YOUR MAIN PLANT AT RAMAPO, NEW YORK.

WE ARE ALSO OF THE OPINION THAT THE MEMBERS OF THE SURVEY TEAM WERE NOT AUTHORIZED TO COMMIT THE GOVERNMENT IN ANY MANNER IF YOU OFFERED TO CHANGE YOUR PROPOSED PLAN OF OPERATION TO INCLUDE THE LEASING OF STORAGE FACILITIES IN THE VICINITY OF RAMAPO, NEW YORK. IT WAS NO PART OF THEIR DUTY TO SUGGEST CHANGES IN YOUR PLAN OF OPERATION IN ORDER THAT YOU MIGHT BE CONSIDERED AS A RESPONSIBLE BIDDER.

YOUR COMMENTS CONCERNING THE WEIGHT OF THE TRACTOR ENGINE AND THE WEIGHT OF THE TRACTOR FRAME ARE NOT CONSIDERED TO BE SIGNIFICANT SINCE IT IS APPARENT THAT YOUR 5-TON OVERHEAD CRANE IS CAPABLE OF HANDLING WEIGHTS OF 10,000 POUNDS OR LESS AND IT IS THE CONTENTION OF THE DEPARTMENT OF THE ARMY THAT THE CRANE IS NOT ADEQUATE TO HANDLE RAW MATERIALS, WELDMENTS AND HEAVY COMPONENTS IN THE SUB-ASSEMBLY AREAS PROPOSED. AUXILIARY EQUIPMENT REPORTEDLY WOULD BE REQUIRED FOR SUCH PURPOSE AND IT WOULD APPEAR TO MAKE NO ESSENTIAL DIFFERENCE WHETHER THE TRACTOR ENGINE WEIGHED LESS THAN THE REPORTED 7,000 POUNDS OR THAT EACH PART OF THE TRACTOR FRAME WOULD WEIGH LESS THAN THE REPORTED 10,000 POUNDS FOR A COMPLETE TRACTOR FRAME.

AS ABOVE INDICATED, THE DEPARTMENT OF THE ARMY DOES NOT CONSIDER YOUR COMPARISON BETWEEN YOUR MANUFACTURING SPACE AND THAT OF THE CATERPILLAR TRACTOR COMPANY TO BE VALID. APPARENTLY SUCH A COMPARISON WOULD NOT BE APPROPRIATE BECAUSE THE EQUIPMENT OF THE CATERPILLAR TRACTOR COMPANY PERMITS A MORE EFFICIENT UTILIZATION OF ITS AVAILABLE MANUFACTURING SPACE THAN COULD BE EFFECTED AT YOUR PLANT NO. 1 WHERE ADDITIONAL OVERHEAD CRANES REPORTEDLY COULD NOT BE INSTALLED DUE TO THE TYPE OF BUILDING IN WHICH THAT PLANT IS LOCATED.

THE QUESTION AS TO THE ADEQUACY OF YOUR SPACE ALLOCATIONS FOR WELDING AND SHEET METAL WORK WOULD BE DETERMINABLE ON THE BASIS OF EXPERT OPINION AND WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE CONCLUSION REACHED BY THE SURVEY TEAM ON THE BASIS OF A COMPUTATION SUCH AS YOU HAVE GIVEN, WHEREIN YOU SUGGEST THAT A PERIPHERAL SPACE OF ONLY 5 FEET BETWEEN FRAME PARTS WOULD BE SUFFICIENT FOR WELDING MACHINES, 40 OR MORE WELDERS AND 20 OR MORE HELPERS.

THE REPRESENTATIVE OF THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES, FORT BELVOIR, VIRGINIA, REPORTED IN CONNECTION WITH THE SURVEY THAT IT IS COMMON PRACTICE TO USE AUTOMATIC OR SEMI-AUTOMATIC WELDING EQUIPMENT IN FABRICATION OF WELDMENTS SUCH AS USED IN THE MANUFACTURE OF TRACTORS IN ORDER TO OBTAIN ADEQUATE WELDS AND REDUCE MANUFACTURING COSTS. WE HAVE NO REASON TO QUESTION HIS STATEMENT IN THE MATTER AND THERE APPEARS TO BE NO SUBSTANTIAL BASIS FOR YOUR CONTENTION THAT THE SURVEY TEAM WAS UNFAIR IN REFERRING TO THE FACT THAT YOU DID NOT POSSESS AUTOMATIC WELDING EQUIPMENT. WE AGREE, HOWEVER, THAT THE ADDENDUM TO THE SURVEY REPORT OF THE CHICAGO DISTRICT ENGINEER OFFICE SHOULD NOT HAVE INDICATED A NEED FOR SAND BLASTING EQUIPMENT IF THE ADVERTISED SPECIFICATIONS DID NOT PERMIT ITS USE FOR REMOVAL OF RUST OR SCALE FROM MATERIALS TO BE USED IN THE MANUFACTURE OF THE TRACTORS.

THE RECORD DOES NOT SHOW THAT THE SURVEY TEAM IMPOSED ANY REQUIREMENT THAT YOU INDIVIDUALLY TEST COMPONENTS. THE SURVEY TEAM MERELY REPORTED THAT YOU DID NOT HAVE THE TESTING EQUIPMENT AND THE CONTRACTING OFFICER MUST BE PRESUMED TO HAVE KNOWN WHETHER YOU HAD THE OPTION OF PERFORMING THE NECESSARY TESTS IN YOUR PLANT OR TO ARRANGE FOR THE MAKING OF THE TESTS BY ANY COMMERCIAL LABORATORY ACCEPTABLE TO THE GOVERNMENT.

THE VARIOUS OTHER COMMENTS MADE IN YOUR LETTER OF AUGUST 21, 1963, RELATE TO YOUR LACK OF APPARENTLY REQUIRED EQUIPMENT AND TO YOUR CONTENTION THAT THE RESPONSIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR SHOULD NOT BE DETERMINED STRICTLY ON THE BASIS OF EXISTING FACILITIES. WE REALIZE THAT THIS CONTENTION IS VALID TO A CERTAIN DEGREE BUT WE BELIEVE THAT IN DETERMINING RESPONSIBILITY CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE QUESTION OF THE ADEQUACY OF THE BIDDER'S EXISTING FACILITIES AND TO THE QUANTITY OF THE ITEMS OF EQUIPMENT WHICH MUST BE ACQUIRED TO MAKE THE BIDDER FULLY CAPABLE OF PERFORMING THE CONTRACT SATISFACTORILY BOTH FROM THE STANDPOINT OF TIME OF DELIVERY AND QUALITY OF PERFORMANCE. WE HAVE CONSIDERED THE FACT THAT YOUR COMPANY IS A SUBSIDIARY OF THE DYNAMICS CORPORATION OF AMERICA AND AGREE THAT THE PARENT COMPANY'S REPRESENTATIONS OR GUARANTEES REGARDING YOUR FINANCIAL RESPONSIBILITY MIGHT WELL HAVE BEEN CONSIDERED MATERIAL BY THE CONTRACTING OFFICER. HOWEVER, THE PROMISED ASSISTANCE OF THAT CORPORATION IN PROVIDING ANY NECESSARY PERSONNEL OR FACILITIES IS NOT REGARDED AS CONCLUSIVE ON THE QUESTION AS TO YOUR TECHNICAL CAPABILITY TO PERFORM THE PROPOSED TRACTOR CONTRACT STRICTLY IN ACCORDANCE WITH THE ADVERTISED SPECIFICATIONS AND YOUR PROPOSED DELIVERY SCHEDULE.

OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION AS TO THE RESPONSIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR IS PRIMARILY FOR CONSIDERATION AND DETERMINATION BY THE ADMINISTRATIVE AGENCY CONCERNED, AND WE WILL NOT QUESTION SUCH DETERMINATION IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE CONCLUSION REACHED. THE COURTS HAVE ALSO ADOPTED A SIMILAR VIEW. O-BRIEN V. CARNEY, 6 F.SUPP. 761; FRIEND V. LEE, 221 F.2D 96. IN OUR CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THIS CASE THERE HAS BEEN FOUND NO SUFFICIENT BASIS FOR CONCLUDING THAT THE DETERMINATION OF YOUR LACK OF RESPONSIBILITY WAS NOT BASED UPON REASONABLE GROUNDS OR THAT IT WAS NOT BASED UPON A FULL AND HONEST INVESTIGATION OF YOUR QUALIFICATIONS.